Default judgments – why do Defendants not defend claims?

At the beginning of March 2023, the Ministry of Justice released the latest statistics in connection with civil cases that were issued in the County Courts between October and December 2022.

As part of these statistics, the Ministry of Justice confirmed that in the same period, the civil Courts made 214,000 judgments. Out of these, 195,000 (or 91%) were default judgments, where the Defendant to the claim either failed to acknowledge receipt of the claim or failed to file a defence to the claim within the specified time period. Indeed, the statistics show that nine out of every ten claims that have been issued since 2018 result in a default judgment.

Whilst the number of default judgments clearly frees up a lot of Court time, it is worth examining why a Defendant failed to defend or decided against defending a claim against them.

Defendant did not receive the claim

In some cases, the Defendant will only find out that a default judgment has been made against them once they receive a copy of the Court’s judgment. In such cases, and where the Defendant would have wished to dispute the claim, it may be possible for the Defendant to apply to set aside the default judgment that has been made against them if they are able to prove that the claim was not correctly served on them, or that they did in fact respond to the claim within time. In such circumstances, it is recommended that you seek legal advice to make such an application as there are certain requirements that need to be satisfied before the Court will set aside the default judgment.

Defendant owes the debt claimed

In many cases, the Defendant may accept that they owed the sums claimed by the Claimant but may not have the monies available to pay. Rather than formally admit the claim to the Court, Defendants are more likely to simply ignore the claim entirely, meaning the Claimant has to take the further step of applying for a default judgment. Whilst this is not an onerous step for a Claimant (it involves completing a simple form), some Defendants are not prepared to make things easy for their opponent to get their County Court judgment.

Litigation is too costly or too time-consuming

The recent figures show that the average time for a small claim to reach trial (from issue) is 51.3 weeks, and for fast-track and multi-track claims, it’s 78.7 weeks. Defendants may not want to become involved in a process that can take up valuable time and last for over a year.

Only around 52% of Defendants have legal representation for the claims against them. As legal costs are not recoverable in small claims cases (which make up the majority of claims issued), appointing solicitors to act for you in defending a claim may seem to many to be almost pointless. Even though the solicitors will be able to assist you with defending the claim (and may improve your chances), if you cannot recover the legal costs you have paid to them from your opponent, then even a successful defence to a claim could leave a Defendant out of pocket.

A County Court judgment still needs to be enforced

Even if the Court makes a default judgment against a Defendant, the Defendant can still choose not to pay the sums ordered. In such circumstances, the Claimant will need to decide if they wish to enforce the judgment and incur further time and costs of doing so.

Whilst a County Court judgment (CCJ) will appear in a Defendant’s credit history (and be a matter of public record) for a period of six years after it was made (and may therefore affect their chances of obtaining credit or a mortgage), many financial institutions will still lend to individuals who have CCJs in their name, albeit at higher interest rates. As such, Defendants may not be concerned that they have a CCJ registered against them and decide not to pay the judgment debt.

A Claimant should carry out research to see if the Defendant has any assets to actually pay the judgment debt and if they do not, then they may decide not to enforce the debt, as it is not cost-effective to do so. However, Claimants can enforce County Court judgments for up to six years after they have been made, so they may decide to wait a few years (for the Defendant’s financial circumstances to improve) before deciding to enforce.

Further, it should also be borne in mind that a Claimant with a County Court judgment against a Defendant could commence insolvency proceedings against the Defendant if they do not pay the judgment on time. This could involve issuing a bankruptcy petition against an individual, if the County Court judgment or debt owed is in excess of £5,000, or issuing a winding-up petition against a company if the debt owed is greater than £750.

As such, there remains a risk to Defendants in not defending a claim and not paying any default judgment made against them.